On June 2, the Environmental Protection Agency announced its Clean Power Plan, a proposed regulation that the Obama administration hopes will reduce carbon dioxide emissions in the United States by 30 percent by the year 2030.
For Glen Hooks, the director of the Sierra Club of Arkansas, the governmental action was welcome and a long time coming. For those in the business of producing electricity from coal-fired power plants, the announcement was greeted with less than cheerful enthusiasm and warnings about the costs associated with such change.
Interested parties have until Oct. 16 to comment on the proposed regulation, which is more ambitious for Arkansas than for all but five states. The EPA pegged Arkansas’ reduction goal at 44 percent by the year 2030.
The EPA said the plan would cut emissions by 730 million metric tons in the United States by 2030. The Clean Power Plan gives each state flexibility in how it will attain the goal the EPA set for it.
The agency gave four ways to achieve the goal, including making coal plants more efficient, increasing the production of natural gas-generated electricity and the increased use of renewable energy sources. Arkansas currently gets almost 44 percent of its energy from coal, 26 percent from natural gas and a little less than 24 percent from nuclear, according to the state.
The Arkansas Department of Environmental Quality and the state’s Public Service Commission held a meeting on June 25 with stakeholders in North Little Rock to discuss the proposed regulation and how best to formulate Arkansas’ specific response.
John Bethel, the PSC’s executive director, said he and his staff were still studying the EPA proposal and it would be premature to comment on the plan’s merits. Bethel said the commission wants to work with the interested parties in coming to an understanding on the plan and its potential impact.
Teresa Marks, director of the ADEQ, said the federal government has given Arkansas a large degree of latitude in formulating a plan, which will be due by June 2015 unless the state gets an extension. Marks said it was important to work with the energy companies since they are the ones that stand to be most affected by the proposal.
“We are working with the stakeholder group now to try to determine the best way to achieve those emission reductions with the least amount of economic impact to Arkansans,” Marks said. “I think the idea of CO2 emission reductions is definitely a good one. It makes sense to look at reductions in power plant emissions.”
The ADEQ said in the presentation that the state generated about 37 million metric tons of carbon emissions in 2012. The state has five coal-fired power plants, including the 1,678-megawatt Independence power plant in Newark and the 1,480-megawatt White Bluff plant in Redfield, both of which are owned by Entergy Arkansas Inc.
Both plants made a 2011 list of the 50 most polluting power plants in the nation in a study researched by the Environment America Research & Policy Center in Boston. The Independence plant was 35th after producing 11.1 million metric tons of carbon dioxide emissions in 2011, and White Bluff was 42nd after producing 10.4 million tons.
“Eighty-five percent of emissions come from those five power plants,” Hooks said. “Our position is we’re not going to be able to meet our carbon-reduction goals in the state until we start looking at the big picture, and the big picture includes shutting down some of our older and dirtier coal-powered power plants.”
Duane Highley, CEO of Arkansas Electric Cooperative Corp. and Arkansas Electric Cooperatives Inc., said the proposed EPA regulations are too punitive against the coal industry and will have harmful effects on the cost and reliability of electricity in Arkansas.
What’s more, Highley said, the proposal wouldn’t have much of the desired effect on global emissions anyway.
“The energy that comes out is so inexpensive; that’s why they’re cost effective,” Highley said of coal-fired power plants. “At least we can run them to the end of their useful lives. This [is a] premature shutdown, save the globe 1 percent of carbon dioxide emissions that’s not going to make any difference in temperature or weather or anything else. It’s mostly window dressing, political to say we’re doing something.”
Hooks said he understands why the power companies want to keep their old coal-fired power plants operating: They’re already paid for. Southwestern Electric Power Co.’s 600-megawatt John W. Turk Jr. Power Plant near Fulton went online in December 2012 at a cost of $1.8 billion, while White Bluff has been in operation since 1980.
“You have utilities that are used to making lots and lots of money on the old model, and they haven’t quite figured out the way to do it in a cleaner way,” Hooks said. “When you have an older coal-fired power plant, it is completely paid for so it’s basically just printing money at this point. They have a real significant financial incentive to keep those old, dirty power plants chugging along.”
A Swepco official said the Turk power plant already meets EPA standards, but one in Texas would require about $400 million in upgrades. The Flint Creek Power Plant in Gentry (Benton County), which is co-owned by Swepco and the Arkansas Electric Cooperative Corp., is undergoing $408 million in upgrades to meet the EPA’s guidelines previously enacted for other pollutants such as sulfur dioxide, nitrogen oxide and mercury.
Highley said shutting down coal-fired plants and relying more on natural gas to produce energy will end up costing consumers in the state. Highley said one of the reasons Arkansas has the heavy burden of a 44 percent reduction is because it has underused natural gas plants in the state, but the state would need to dramatically upgrade the natural gas infrastructure of pipelines and storage units to handle the increased workloads.
That all will cost money, lots of it, Highley said. He said natural gas is already twice as expensive as coal and as demand for it increases under the EPA’s new plan, the price will only go up.
Highley said even if natural gas prices stayed stable, he predicted a 20-40 percent rate increase in energy bills.
“If they were getting something for that money, it might be worth it,” Highley said. “It’s not really a getting-a-bang-for-your-buck thing. If what you’re trying to do is reduce global carbon dioxide emissions, whether you believe in that or not, it’s not going to achieve that policy objective.”
In its proposal, the EPA estimated an annual saving of $55 billion to $93 billion in health and environmental benefits by 2030. Hooks said the idea that cleaner standards would result in higher bills is fear mongering by energy companies.
“Every single time the EPA releases a rule that improves our environment or our public health, you hear howls of protest from the polluters,” Hooks said. “That’s because they’re making a lot of money damaging our environment and our public health. They always say the sky is going to fall, and it never does. They always say it is going to be devastating for the economy, and it never is.”
Highley said he and others in the energy business have grown accustomed to being the “evil guys in the black hats.” He said he is just trying to protect his customers by making sure electricity is cheap, reliable and clean — all of which he says coal-fired power plants can deliver.
The older plants, such as White Bluff, would need what the industry calls scrubbers installed to make them cleaner, but that is a much smaller investment than closing them down entirely.
“We would prefer to invest in scrubbers to clean up that plant and let it run for another 20 or 30 years,” Highley said. “You could recover that cost in energy savings easily because it’s an inexpensive plant to run. I know there are people with strong opinions on coal and just want to see it all gone.”
Diversify Energy Sources
Marks, the AEDQ director, said the EPA proposal is a good opportunity for Arkansas to expand its energy portfolio by increasing its use of sources such as wind and solar. That thought was echoed by Ken Smith, the policy director of the Arkansas Advanced Energy Association, which represents more than 80 companies involved in alternate energy sources and energy-efficient technologies.
Smith called a power plant such as White Bluff “a dinosaur” and said reducing a reliance on coal could spur new energy initiatives. Smith said a key to reducing emissions is to improve the overall energy efficiency of homes and businesses so that less energy is used.
“The American people are going to come out on the long end of the stick instead of the short end of the stick,” Smith said. “The rule is on the right track. If we put our minds together we can do this, and we can do it in a way that will be cost-effective and minimize impact on our companies and residential ratepayers.”
Hooks agreed that Arkansas needs to invest in better and cleaner energy technology. He said Arkansas could be using 100 percent clean energy in 30 years if there is enough “political will.”
“I’m hopeful when my kids are my age, their kids will look back and say, ‘You guys burned coal? How stupid was that?’” Hooks said.